In Defense of College Savings Plans: Using 529 Plans to Increase the Impact of Direct Federal Grants for Higher Education to Low- and Moderate-Income Students

Abstract

A high school graduate with no college education can expect to earn on average $638 per week. Those holding a bachelor’s degree earn almost twice as much at an average of $1,121 per week. This will amount to almost $1 million more in earnings over a lifetime. These abstract numbers, however, do not tell the entire story. Consider that at $638 a week, a person with only a high school diploma will earn on average $33,176 per year. This falls below the average annual family budget by almost $7,000 per year when including only necessities. In fact, this annual salary is lower than average family budgets in seven of the eight cities sampled.
In addition to these individual monetary benefits, higher education also has significant non-monetary benefits as well. College graduates overwhelming report being happier and healthier than those who only attended high school, and most often reported being in “excellent” or “very good health.” This disparity increased with age — for those over the age of 65, 70 percent of college graduates identified themselves as being in good health compared to “only 45 [percent] of high school graduates.”